Tesla CEO Elon Musk once described Hong Kong as a “beacon city for electric vehicles” due to its extremely high rate of EV adoption. He might have as well called it a “beacon city for Tesla” since most of those vehicles were Tesla’s, which held over 80% market share in Hong Kong’s EV market.

But the government succumbed to pressure from other automakers last year and slashed EV incentives.

Electric car sales in the “beacon city” have now come to a crawl and Tesla is reportedly planning to downsize its 200-people workforce in the region if it continues.

8 months later, Tesla sold only 32 more cars in Hong Kong, according to registration data.

Tesla had grown its operations significantly in the city leading to the removal of the incentive and even opened a massive new service center just months before sales crashed.

Now the South China Morning Post reports that Tesla sent a letter to Carrie Lam, Chief Executive of Hong Kong, to ask her “to rethink last year’s ­removal of a full registration tax waiver on electric cars for private use.”

The automaker responded to the report:

“Our launch in Hong Kong in 2010 was one of Tesla’s earliest, and we remain committed to our customers here, affirming that commitment with the opening of our second Service Centre last year. We remain hopeful that the government will continue to encourage more electric vehicles on the road and preserve Hong Kong’s lead in clean, sustainable living.”

The government is reportedly reviewing the change in its latest budget to be released this month.

Electrek’s Take

Unfortunately, the stop of EV sales in Hong Kong shows that government incentives still have a strong impact on electric vehicle adoption, the same result happened in Denmark when they removed their incentives a year before.

The problem is that if gas-powered vehicles are taxed like electric vehicles, which is now roughly the case in Hong Kong, it means that the gas-powered cars are the ones being subsidized since their price doesn’t account for their cost on the environment and local air pollution – something Hong Kong knows very well.

What’s even more frustrating is that several automakers are believed to be behind a lobbying effort that led to the change – automakers who from the other corner of their mouth claim to be behind the electric revolution.